A tax lien is a legal claim made by federal, state, or local government authorities against your property to ensure that any unpaid taxes are collected. Numerous assets, including but not restricted to your home, vehicle, bank account, and even retirement money, may be subject to tax liens. This lien restricts the owner’s ability to sell or transfer the property and acts as collateral for the unpaid obligation.Tax liens are a matter of public record and can harm your credit score, career, and reputation.
How Can I Get a Tax Lien Released?
If the tax lien was not filed in error, paying off the tax debt in full is the primary method for automatically removing a lien against you. However, this is not always a financially feasible route, especially as the lien may greatly affect your job and income prospects.
If you cannot pay the debt in full, there are other options to explore when navigating the complexities of the lien release and removal process. A few resolution options are listed and discussed below.
- Installment Agreements: Installment agreements can facilitate the lien release process.The IRS may allow a lien release if you owe $25,000 or less, among other requirements,and enter into a direct debit installment agreement (DDIA). Under such an agreement, taxes are regularly withdrawn from your bank account until the debt is satisfied.
- Offer in Compromise: You may be eligible to settle your tax debt for less than the full amount owed through an offer in compromise. This option serves as a negotiated settlement between the taxpayer and the tax authority. It involves making a lump sum payment or periodic payments. When determining eligibility, the tax authority will consider your unique facts and circumstances, including ability to pay, income, expenses, and asset equity. An offer in compromise is typically accepted if the amount offered represents the most the tax authority reasonably anticipates collecting within a specified period.
How Can I Reduce the Impact of a Tax Lien?
Under certain conditions, the IRS may agree to lessen the impact of a tax lien. Generally, they will only agree when the outcome is mutually beneficial.
- Lien Subordination: Suppose you decide to refinance to obtain a lower interest rate on your property. Requesting subordination of your existing tax lien may assist in the process.Such an arrangement allows the mortgage lender to have their lien repositioned ahead of the IRS. This prioritization of the financial interests of other creditors would potentially make it easier to obtain a mortgage, loan, or other financing. In return, you could demonstrate to the IRS that the securement of new loan terms would help fulfill your outstanding tax obligations.
- Discharge of Property: Let’s say you wanted to sell a property with a lien. Buyers may be hesitant if a lien exists on the property. To facilitate sale of the home,you may apply for a discharge of property. If you meet the eligibility requirements, the IRS agrees to remove a lien against the specific piece of property so it can transfer free of the lien.This would allow you to sell the property and use the funds to pay off your back-taxes or establish a payment plan.
Need Help to Secure Tax Debt Relief? Contact Anderson Bradshaw Tax Consultants Today
The expert tax professionals and consultants at Anderson Bradshaw Tax Consulting can help with any tax situation. With over 30 years of experience in the industry, we have seen almost every tax issue and have learned the best ways to handle each situation. You can feel confident knowing your difficulties with the IRS can be resolved and corrected quickly and efficiently at AB Tax Consulting.